Option Choices

Selecting which option to take is usually the single most important part of a project.

Making the wrong choice, even for the right reasons, can put benefits delivery, and even business survival, at risk.

Stakeholders will each have their views, but it is the business as a whole, and it's sustainability, that takes priority in the selection process.

Below is a real example of just such a decision point. Although we have no special knowledge of the events described and have no involvement with any of the parties involved, it provides a well documented use case of business analysis in action.

The Case for Doing Nothing

For most of us, the do nothing option is a frustrating cop-out and looks like an excuse not to invest in us, or our business.

Yet there are many situations where this is the preferred, and possibly the only, reasonable path available.

A recent attempt to break all existing transfer records provides an example of doing nothing to great effect.

Background

Here is a brief introduction to the parties involved, for anyone unfamiliar with this story.

AC Milan: One of the most successful football clubs in the world.
Kaka: A 26 year Brazilian World Cup winning footballer.
Manchester City FC: (Man City) Currently known as 'The Richest Football Club in the World'.

After changing ownership in September 2008, Man City gained access to unprecedented funding potential which enabled them to secure the services of another world class Brazilian footballer (Robinho) in a last minute deal ahead of Chelsea FC.

This coup gave the club and it's new owners an immediate and tangible uplift in status and credibility.

Success in the transfer market did not quickly translate into playing success though, and it became clear that more time, and signings were needed.

The Objectives

Without wishing to second-guess the reasoning behind the offer for Kaka, we can consider some of the factors that would make such a deal attractive.

  • Following the capture of Robinho, bringing Kaka to Man City would reinforce the club as a destination to be considered by the best players in world football.
  • The sort of sponsorship and television rights that modern football clubs rely on could still be forthcoming, despite the season's underachievement.
  • Such a monumental signing could serve as the trophy that their new owners might have hoped for in their first season.

The reluctance of AC Milan to sell their prized asset and his unwillingness to leave, caused the club's and player's demands to escalate, until the figures talked about became multiples of all previous records.

Business Environment

Such was the media frenzy surrounding the deal that it became headline news on a daily, primetime basis.

Analogies were drawn with Chelsea FC, a previous holder of the Wealthiest Club title, but the actual figures dwarfed anything that SW London had seen.

The world banking crisis and recession were continuing apace with no sign of let-up.

The industry itself started to question the wisdom of such a deal, and the effects that it might have on football at large.

Analysis

Despite the obvious attraction to Man City FC, it's sponsors, staff, and supporters, there must be real concerns about completing this project.

Although the club could afford the offer, it could hardly be sustained by current footballing revenues. 

And this was not a one-off cash injection. 

The proposed wages would themselves be almost unrecoverable even in a moderately successful year, and as other players sought parity, which Chelsea's experience proved they surely would, no amount of playing success could provide even a break even return.

The instability of the world economy meant that an uncertain future lay in wait, for the short term at least.

The Selection Process

We can only surmise what actually happened. 

Kaka is said to have turned down the deal and Man City did not increase their offer so it appears today (20th Jan), that normality has been restored to world football. 

The choices for the club would have looked something like this:

Either continue with an increased offer (and run all the accompanying risks), or walk away.

For whatever reasons, the latter option was chosen.

But, was all that effort wasted? What about their objectives? 

Well, these have largely been achieved:

  • The club is now firmly established as a potential destination for any talented and ambitious player in world football.
  • Such publicity surrounded the deal that Man City FC received the sort of brand exposure few would have thought possible.
  • The club's new owners can bask in the limelight, knowing that their purchase really has arrived on the world stage.

And all with not a penny spent.



Conclusion

Selecting which course to take is seldom a foregone conclusion.

The option to 'Do Nothing' is always considered when evaluating business proposals.

Each proposal should be viewed in it's wider business context.

Remember that a project must have a set of objectives, and it is their achievement that denotes success.